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The Financial Services Authority says it will place a cap on mortgages to prevent people from borrowing more than the traditional multiple of three times their annual salary, in order to stop the kind of lunacy we saw at the peak of the property boom when people were able to obtain mortgages of up to six times their yearly earnings. The newly emboldened regulator also says it’s going to put a stop to 100% mortgages – although that’s kind of a moot point since the banks have already figured that one out for themselves, these days it’s almost impossible to get a mortgage without a 5% deposit at the very least. While the FSA might be feeling a...

Today the FTSE 100 experienced an amazing rise in value, over 8% in a single morning – something which is practically unheard of in the history of the stock exchange. What’s happened here? Just yesterday the entire global economy was collapsing into chaos, so what could possibly have enabled the stock market not just to stabilise, but to see one of its biggest ever increases in a single day? Not much, as it turns out. But this just goes to show how completely irrational the stock market really is. The Financial Services Authority has announced that traders will no longer be able to ‘short sell’ the shares of financial services companies until the middle of next January. If...

Although most people have a rough idea of how the UK economy works (or, if you’re being cynical, doesn’t work), the functions of the various components and their relationships to each other can be quite elusive. We’ve covered some aspects of money on this site in the past (here, for example), but there’s more to the economy than money itself. In fact, arguably more important than money is the way in which that money is moved around the economic system of the UK. Over the next few articles I’m going to look at each of the main institutions involved in the movement and management of money in the UK. I’ll be looking at the Treasury, the FSA, the...